HKT Trust and HKT Limited (6823) Earnings Call Transcript & Summary

Good evening, and welcome to the HKT 2022 Annual Results Presentation. In attendance today, we have Ms. Susanna Hui, Group MD; and Mr. Patrick Poon, Group CFO. We will start with the presentation followed by a Q&A. And with that, let me turn it to Susanna.

Good evening. Thank you for joining the briefing session of our annual results announcement. As we all experienced, 2022 was indeed a very challenging period for all of us. Not only did we suffer from the lingering impact of COVID, particularly hit by the fifth wave in the first quarter of last year, and any attempt in revitalizing the economy was derailed by the interest rate hikes in the second half. Despite all of these headwinds, HKT managed to deliver a very resilient performance for another year with 2% growth in services revenue, 3% growth in EBITDA and a 2.4% increase in AFF. And so we are pleased to announce that the Board has proposed a final distribution of HKD 0.4315. And together with the interim distribution, total distribution for the year will amount to HKD 0.7451, representing a growth of 2.4% with a very healthy yield of close to 7.2% based on today's closing share price. Turning first to our mobile business. It is very clear that if you look at our slide here, we continue to consolidate our market leadership position with net addition of 26,000 customers during the year. Postpaid customer base reached 3.323 million as at year-end with postpaid churn rate stable at 0.8%, overcoming indeed the effects of a very soft Hong Kong economy last year, the wave of immigration that we experienced, especially in the first half and also the intense competition throughout the market. And on the right-hand side, you can see that the 3 years of COVID have indeed taken a toll on our mobile services revenue. However, we saw initial signs of recovery towards the Q4 of last year, especially as the social distancing and quality regulations in Hong Kong were relaxed and borders reopened. And indeed, the full travel resumption in 2023 will be a welcoming catalyst for the rebound of our roaming revenue. But in last year, despite the absence of roaming ARPU still increased to $188, benefiting from the expanding adoption of our 5G across our mobile customer base. Looking ahead, we are very confident that the further 5G adoption and the return of the roaming revenue will be the dual growth engines for our mobile as we unwind the COVID headwind and accelerate growth in 2023. Our 5G customer base during the year crossed a key milestone, expanding to over 1 million customers, which represents almost 1/3 of our total base, obviously, providing the required ARPU uplift. Future 5G take-up will be increasingly, in our view, driven by value-added applications, so which we believe AR/VR will be instrumental. And this year, leveraging our sponsorship of the Kusama Exhibition M+ Museum we developed AR lens application to help drive customer engagement, providing indeed very differentiating services to keep our brand top of mind for customers, especially important for the 5G switches. As for roaming revenue, with the initial opening of borders and realization of quarantine requirements, Q4 started to witness an increase in outbound travel, which contributed to a 41% surge of our roaming revenue in Q4 as compared to Q3. And outbound revenue total registered 25% year-on-year growth. Of course, following the full reopening of borders in January, we witnessed a number of roamers reaching 76% of pre-COVID levels and revenue correspondingly hitting almost 70% pre-COVID. We also observed that roamers were now much more discerning in choosing service providers that will provide convenient and reliable 5G, which works to our advantage. We are, of course, offering very flexible, high-quality 5G roaming packages at various popular overseas destinations, ranging from; special China-Hong Kong-Macau plan, other destination plan, Pre-purchase day passes, and our monthly VAS subscriptions. Riding on the government's Hello Hong Kong campaign and yesterday, it was a happy Hong Kong campaign. We do see Hong Kong continue to host multiple large-scale international events in the year, and we expect that roaming revenue will rebound significantly in 2023 to almost 60%, 70% of the pre-COVID level. Turning to the next slide here. The Metaverse is potentially the next iteration of how humans use the Internet to connect, communicate, and transact in an immersive 3D virtual way. And of course, 5G with its low latency and ultra-high speed capabilities will demonstrate its relevance as the enabling infrastructure. With this in mind, we have started last year to establish our presence in the Metaverse. We partnered with Sandbox to create a unique space, which we have called Futurera. And currently, Futurera offers a variety of immersive games, leveraging on our group IP by our sister company, ViuTV, are using, for example, the popular game show "Be ON Game". We have also started on this platform, a Web3.0 talent recruitment on the platform. Also to help drive customer awareness and engagement, we established Metaverse Academy to provide training through gamification. Hopefully, this will build a tech-savvy customer base that we attract quality partners, and we'll be able to monetize as Web3.0 applications span beyond gaming to across e-commerce, life entertainment, and even remote learning. To ensure we provide the best 5G user experience in Hong Kong, after completing the territory-wide coverage in 2022, we continue to enhance coverage in indoor areas as well as rural areas through deployment in the new 700 megahertz band, which further boosted indoor performance through utilizing the 4x4 MIMO technology. Obviously, yesterday, the budget gave us some good news in terms of the tax deductibility of the spectrum fee, which will be a plus to our cash flow going forward. Now turning back to the network. As for high-traffic locations, such as the premium shopping malls and hospitals and popular F&B chains. We have continued to deploy additional indoor system and lamp site solutions to cater for traffic first. We are also the first operator to use Dual C-band Massive MIMO base stations, which can handle 2 bands, the 3.5G and 4.9G, on one single piece of equipment. This not only doubles speed and capacity, it also optimizes the sell-side architecture, which is important, particularly given the limited space in Hong Kong and also the high cost of rooftop cell sites peculiar to the Hong Kong environment. Last but not least, we are very green conscious. We have taken steps to improve the operations of our network to reduce energy consumption and also the impact on the environment. This includes the use of solar panels on our exchange buildings, natural cooling for cell sites, et cetera. Talking about our network, it is not just a 5G network that is important and unrivaled. In fact, we will have to reiterate that our network is only one part of our integrated network. At the center of this is the robust unparalleled extensive fiber infrastructure that we have built over the years, that we have invested over the years. It is now extended to villages remote areas outlying islands and new housing assays, obviously, which can now serve 98% of the Hong Kong households with different broadband services as we delivered through a 100Gpbs-plus carrier-grade network infrastructure. And if we can explain a little bit more through this slide, you can see that our IP backbone is already 1 terabit, and the core network is more than 400G+ interconnect trunks with access nodes of more than 100G, resume directly to our customers' premise for 10G+, even the last mile is fiber. So we are the only operator that can provide 10Gps symmetric PON-based broadband services territory-wide. And with our massive core network, we are ready to continue supporting the customer experience as future applications definitely will be more and more data intensive. And so our network is already future-proof. During the year 2022, HKT Navigator offers a diverse and complementary range of home broadband solutions to meet the varying needs of individuals and households, especially important when COVID brought about a permanent shift to a lot more digital activities at home. During the year, you can see from the slide here that we have launched Fiber-to-the-Room (FTTR) and the latest Wi-Fi 6E router, which can achieve over 1Gps speed to complement our 2.5-gig PON surface, and also flexible 5G wireless home Internet options as well. All of these are to enable us to deliver high speed, low latency, and exceptional stability of broadband into every corner of our home. We are also conscious of the fact that there are a lot more multiple users in a single household. And to that end, we provide multiuse broadband solutions such as 2 x 1000 M and 4 x 1000 M services, which can provide the characteristics of dedicated bandwidth and individual public IP addresses to each of the individual users at home. And we also have ultra-high-speed multi-gigabit technology to provide 2.5G and 10G broadband speed for home service and for home entertainment and gaming purposes. And this is particularly important for people like the KOL on the social media who are uploading the using their home media studio to upload 8K video, VR/AR and so on, all of these high bandwidth applications, which are getting more and more popular. And we believe that there is no other service provider in Hong Kong, which can match the breadth and quality of our navigator broadband. So with that, you can see that during the year 2022, we continue to have broadband subscriber expansion with a net gain of 4,000 broadband subscribers to 1.465 million as at December 2022, despite the immigration headwind that we experienced for the past couple of years. We continue to see the demand for high speed and reliability for Fiber-to-the-Home, which manifests itself in terms of continuous growth year-on-year by 3% to 969,000 subscribers, which represents a penetration of 65% of our total broadband base. And home Wi-Fi solutions also grew during the year, which provided an ARPU uplift of $99 and representing a penetration of 24% of our broadband base. Now obviously, on top of B2C, we also provide these Wi-Fi and smart living solutions to be wholesale to the property developers in Hong Kong. And during the year, we secured an additional 46 new residential projects, which represents an increase of 35%year-on-year, the revenue of which will be spread over the coming 2 to 3 years as the project sees itself to completion. Turning to the next slide is our Pay TV, Now TV. Obviously, there was an operator recently surrendering its Pay TV license and this has sparked certain debate on the viability of Pay TV and the proposition of Pay TV in general in the market. Especially in the view of the competition from other OTT content and free content. And for us, we believe that Now TV continues to offer a very unique proposition to both our audience as well as our content partners. Now TV indeed is a very dedicated IPTV platform that is integrated with a robust network infrastructure that we have talked about in the earlier slides. It can deliver a scalable and more importantly, a very seamless, stable viewing experience, not just the traditional linear but also personalized on-demand content across a number of devices. Seamless experience across the big TV screen for the family as well as individually on smart devices such as handset, tablets, laptops and so on through our Now Player App as well as our Now E OTT service, which allows quite flexible packages of different content genres. In other words, we are already embracing the OTT technology instead of fighting against it. We are embracing and we have already elevated ourselves out of the traditional Pay TV proposition. And of course, another point that I would like to share with all of you is that we do have the strength of our #1 market share in both our broadband and mobile customer base, and this is a very loyal premium customer base that we have. This obviously forms a base on which we can continue to provide and the potential Now TV customers, especially with our data analytics capabilities in-house. As you can see here, our paying customer base during the year 2022 continue to grow by 2%, reaching 1.4 million as at year-end. And again, I have to stress that this is despite all of the immigration statistics provided by the government in terms of people leaving Hong Kong and expatriates leaving Hong Kong and so on. And so we must have done something right in the sense that we are customer-centric, we focus on 3 pillars of content. So for instance, sports is one of the most important content pillar. And worldwide Pay TV operations, you can see that the sports is also the #1 content. We pride ourselves as a home of sports. We offer views the most popular football leagues from around the world, including Premier League, La Liga in Spain, Serie A in Italy as well as a wide selection of sports, including Tennis, Golf and Badminton and so on. Undoubtedly, the [indiscernible] highlight of the year was, of course, the World Cup, which helped to drive the advertising revenue for our Now TV by 52% growth half-on-half. We also benefited from the very timely relaxation of the social distancing regulations in Q4, which drove the commercial subscription primarily from the bar, from the F&B outlet, and so on and also the shopping malls. Revenue was up by 22% half-on-half as well. So this is the sports content. The other content pillar is catered for the family with kids segment. For this content, we have extended into the educational content as well as driving engagement with our younger demographic. During the year, we extended the ecosystem with a new STEM learning content as well as partnering with our own self-developed AI interactive robot learning for kids. We have also extended from online to offline engagement through the opening of an indoor playground on Island West called [indiscernible]. Now the third pillar of content is a general entertainment, including drama, movies, and so on. So we are now a super aggregator, providing an open platform via our smart Android system is set up out at home. Providing the largest library of entertainment programs, and we embrace the top-tier OTT partners onto the platform, obviously, including our own affiliate company, our own Yellow Viu and Blue Viu, as well as others, which provide exclusive Korean content, Chinese content, Asian drama series, as well as blockbuster movies, both local and western, different factual entertainment, and so on. On top of that, we also have the exclusive MOOV concerts for our music lovers. What we provide is quite a different proposition, not the traditional Pay TV. Whether you need a Pay TV license or not is a different matter, but we have already outgrown ourselves to become a different proposition, embracing OTT as well. Turning to our enterprise business. Our enterprise business also had a decent growth in the year 2022, having 3% growth in terms of global data. Obviously, we continue to offer enterprises and public sector customers in Hong Kong. The growth should have been higher, if not for the soft economy during the year, which saw contraction generally for the SME segment. But despite that, we continue to provide this smart and secure solutions to drive digital transformation. In the past, the verticals will be construction, hospitals, and so on. But with the opening up of the world, we are also active in the airport transportation industry, where we have developed solutions that can enhance the user experience and passenger safety. We have also seen increased projects in terms of the hotel industries as the hotel operators start to prepare for the arrival of tourists. So our solutions provide them with the elevated experience for guests that can cater for increasingly digital needs as well as applications for robotics and so on to help streamline operations during a period when there is generally a shortage of labor. In the property management industry as well, including shopping malls, we have transformed the tenant experience and operations by developing smart apps for tenants to manage their requirements and also smart sensors and so on, IoT capability, AI capability to empower preventive maintenance and increase their operational efficiency. Now it's worth noting our performance in China as well. I think in the past, we have talked about the potential growth of our connectivity in China, especially when we are following our Hong Kong customers into China, GBA area and beyond, and we have already given guidance in the past about reaching HKD 1 billion revenue in 3 years. And we are pleased to report that during 2022, we achieved a growth of 57% for our China business, despite the periodic lockdown in the Mainland as we provide a lot of different solutions for the retail industry in Hong Kong as well as the insurance industry in Hong Kong to remotely manage their business in China. We continue to be confident that we'll be able to expand our product offerings and partnership with the market to further scale up the business here. Looking at our PCCW global business, our international business, we continue to expand our international network to improve the service experience and to serve the carrier and enterprise customers outside Hong Kong and China. During the year, we have extended our infrastructure, 2 investment in the PEACE MED and Jupiter cables, adding capacity in the Middle East, Mediterranean, and North Africa regions. To automate our service offering, we also have our Console Connect, which is a software-defined platform, which has connection to over 160 cloud zones, connecting over 850 data centers globally, which is growing very significantly during the year. Next slide would be our CLUB -- our loyalty program, which is at the center of our digital ecosystem. As you can see here, during the year, we also expanded our member base to over 3.7 million, a 5% growth year-on-year. And we continue to provide a range of premium digital services evolving around the CLUB members. These include our CLUB platform, which provide e-commerce, a wide area of merchandises. Actually, last year, we saw non-iPhone GMV increased by 16%, and we also are providing different embedded finance services, digital payments, insurance, and so on in this digital ecosystem and also online travel packages as well as our telemedicine, DrGo. We recently announced a partnership with Agoda to enrich our offering of the travel services as more and more customers use the expanding portfolio of services of our CLUB. Eventually, we have this ambition to build a super app to offer a convenient and customized experience in our CLUB members and thereby creating a flywheel of increasing engagement and spending of our CLUB members over our diversified portfolio of services provided. As announced during the recent budget, actually, it was just yesterday, the government -- the Financial Secretary has announced another round of CVS of HKD 5,000 to each of the Hong Kong citizen. And we are very pleased to be able to participate again in this third round. And through the previous 2 rounds, we have already built a very sticky CVS customers. And with our large base of the Tap&Go members of over 3.6 million, we will continue to devise new packages to promote this CVS spending via our Tap&Go. Actually, if you look at the slide here, you can see that in terms of the merchant subscription of our point-of-sales terminal, it has now reached 8,000 subscriptions and also -- which represented an increase of 29% year-on-year. The transaction volume on the merchant side should the -- through our point-of-sales terminal jumped by 68% year-on-year. And on the consumer side, the customer spending over our Tap&Go platform saw by 55% year-on-year as well. We do see that this evolving spending habit of customers will continue and will continue to accelerate the digital spending behavior in Hong Kong. Turning to our DrGo. Last year, we also saw very strong growth with registered members continue to grow, hitting 352,000. More importantly, we see a 15x growth of the video consultations during 2022. Obviously, as I said last year, and all of us would remember there was still a lot of inconvenience going out seeing the doctors and so on. So there were substantial growth, exponential growth, indeed in terms of the video consultations. We also have therefore seen additional doctors and medical service partners added to the platform, which now amount to over 130 doctors providing services and also 15 medical partners providing different GP, SP, psychology, and other Chinese medicine services on our DrGo. We have also opened a digital health store during the year to serve the wellness needs of members. Also, we continue to explore new features, add new features onto our platform. And of note is that we launched the first office kind in Atrial AF Tele-Screening program, enabling our users to check their heart rhythm on our DrGo App at any time. This represents our initial foray into preventive care to promote the well-being of the general public, obviously, with the aim of alleviating the burden on our public health care systems as well. Now final 2 slides for me is this the sustainable future and how HKT has always stood by the community. We continue to support our community during the COVID period. By providing various free telecom services such as health hotlines, Internet connection to the community isolation facilities, free services for DrGo and also, we are one of the donors supporting the Strive and Rise Program by the CS, which is a program to support use upward mobility. And of note is that our own colleagues, more than 100 of them have signed up as mentors as well. In terms of climate change, we would also like to share all of you that we continued our efforts in terms of combating climate change and building a sustainable future. Details will be obviously covered by our ESG report, which will be out soon. We have been leveraging emerging technologies like AI, IoT to provide energy management solutions to corporates and households. Also, we have our Smart Charge EV charging service to promote green transport, and we have also committed facilities of USD 2 billion in terms of sustainability-linked facilities. All of these are our efforts in terms of contributing to a sustainable future. In summary, we have demonstrated a very strong resilience in 2022 in our third year of COVID headwinds. Of course, we will continue to focus on delivering expanding our broadband services, our mobile services, and also deliver synergies in terms of realizing savings, and supporting our consumer and enterprise customers, deploying the latest technologies to bolster Hong Kong as a smart city and also through our CLUB loyalty program enrich our Super App digital ecosystem to deepen engagement with customers and merchant partners as well as contribute to the development of a digital economy in Hong Kong. And with that, I will pass to Patrick Poon, our CFO, to share with you the detailed financials. Thank you.

Thank you, Susanna. Let's recap our key financial lines for the full year 2022. Our AFF continued to show a solid growth of 2.4% year-on-year to USD 724 million. Our service revenue was up by 2% to USD 3.91 billion. The growth was driven by continuously strong broadband and local data connectivity demand, further momentum in 5G adoption, and delivery of enterprise digital transformation project in both Hong Kong and Greater Bay Area. And including handset sales, the total HKT revenue was maintained at a similar level as last year. Our total EBITDA for the year was up by 3% to USD 1.68 billion. Spared by cost efficiency initiatives achieved across the group, leading EBITDA margin expanded to 38%. And our net profit after tax grew 2% to USD 628 million. Looking into the details of our TSS segment. From the chart on the right-hand side, you can see our local TSS service revenue grew by 1% year-on-year, reaching to USD 2.12 billion, in which local data and broadband services continue to be the key growth drivers. As mentioned by Susanna just now, the growing demand for our unique integrated fixed mobile solutions across different industries, incorporating 5G connectivity with smart city solutions like blockchain, AI, machine learning and IoT in Hong Kong and GBA drove up our local data revenue by 3% year-on-year. With the increasing adoption of digital services at home and ongoing hybrid and education arrangement, especially in the midst of the fifth wave of COVID-19 last year. Demand for our robust, high-speed, and reliable broadband network remains strong and increasing. As such, our broadband services revenue report a 2% year-on-year growth. Local data services revenue registered a solid growth of 3% and Pay TV service revenue also ramped up by 2% to $320 million, primarily driven by the exclusive broadcast of FIBA World Cup 2022 as well as our comprehensive and compelling world-class content to cater for different customer segments in Hong Kong. To include our international business, of which the revenue rose 7% year-on-year driven by the demand in both voice and data services. Our total TSS revenue increased by 2% to USD 3.07 billion. As a whole, TSS segment EBITDA has maintained a steady 2% growth to $1.2 billion, attributable to the continued operating efficiency and ongoing conscious cost control. TSS EBITDA margin was maintained at 38%, same as last year. Now let's turn to our mobile business. Mobile services revenue rose 2% to USD 1.02 billion for 2022. Contributed by, firstly, the continued expansion of our postpaid customer base now to 3.323 million, a net gain of 26,000 year-on-year. Secondly, the higher 5G adoption with customers in use exceeding 1 million to 1,061,000 representing almost 1/3 of our total postpaid customer base and also as well as the higher revenue contribution from mobile broadband and new enterprise solutions. Our post-paid exit ARPU grew by 1% or HKD 1 to HKD 188 at the end of the year. Handset sales slowed down by 8% year-on-year to USD 465 million as a result of supply chain disruption and peak supply in 2021 from the delayed launch of popular handset models. Total mobile EBITDA grew 2% from USD 613 million to USD 627 million, of which mobile services EBITDA also up by 2% to USD 617 million with mobile service EBITDA margin improving to 61%. Let's have a closer look at our OpEx, operating expenses. TSS and mobile both achieved 7% OpEx savings, respectively. Reflecting our continuous focus on efficiency improvement across each business segment through accelerated business process digitalization and optimizing offline to online, the O2O, sales channels, and retail reopens to drive higher sales efficiency. On the mobile network operations side, efficiency gains will also capture mainly from improved mobile sales architecture, enabling network design optimization, as explained by Susanna earlier. Together, with other savings from the other business, the group reported a 12% OpEx savings to USD 509 million. With the OpEx to revenue ratio improved significantly from 13.2% to 11.6%. Apart from OpEx, we are also exercising cautious controls over our CapEx spend. Our total CapEx for 2022 was further lowered to USD 301 million, representing a 5% year-on-year saving. Mobile CapEx registered a 10% saving year-on-year as we have completed our territory-wide 5G coverage rollout. Looking forward, our CapEx spending is mainly for the fulfillment of license application in coverage for different spectrum bands and also mid demand capacity expansion. TSS CapEx was stable at USD 183 million. We're focusing on meeting the demand for our customized smart city solutions for enterprise segment. Accordingly, the overall CapEx to revenue ratio further improved from 7.2% to 6.9%, which is well contained within our stated guidance of 10%. Next are the AFF. We have already covered the EBITDA and CapEx line just now. On the CAC license fee, it went down by 8% from USD 218 million to USD 201 million, mainly due to improved sales channel efficiency and also the lower spectrum license fee from the 1,800 megahertz renewable. Fulfillment costs in respect to customized commercial projects increased to USD 72 million as compared to USD 62 million last year as a result of more delivery of customized enterprise solutions. Payment for right of use asset, which is representing the rental payments decreased significantly by 14% from USD 208 million to USD 178 million, reflecting our effective and successful shop rationalization strategy. Payment for full year finance costs increased to USD 113 million or 47% increase caused by high ball increase, which closely tracked the increase in U.S. interest rate. However, the increase can be fully absorbed by the savings from various lines above, which grew 11% to USD 935 million, a year-on-year increment of totaling USD 96 million. The tax payment deferred earlier to early 2023 was accrued as part of the change in working capital. Together with the higher year-end inventory level, change in working capital temporary rose to USD 87 billion. Therefore, our AFF for the full year grew 2.4% to USD 724 million, translating into a final distribution of HKD 0.4315 per SSU in issue. Including the interim distribution of HKD 0.3136 per SSU, total distribution for full year 2022 is HKD 0.7451. Income statement. For the detailed P&L, we have basically covered from the revenue to EBITDA line just now. The depreciation and amortization increased by 3% year-on-year to USD 745 million. This was mainly caused by higher mobile license fee amortization. As explained in the AFF side, our P&L finance costs went up by 8% to USD 204 million, caused by higher market interest rate. Income tax expense was lower at USD 62 million as compared to USD 128 million last year as we recognized a deferred tax asset of a loss-making company turning profitable. As such, our net profit for 2022 was up by 2% to USD 628 million. Turning to our gearing position. Our total gross debt at the end of 2022 was stable at USD 5.6 billion Corresponding gross debt-to-EBITDA ratio was dropped from 3.45x to 3.38x. As of today, we have over USD 2 billion local liquidity to USD 2.1 billion indeed, including undrawn banking facilities of around USD 1.85 billion and also USD 271 million cash on hand. We continue to carry an investment-grade rating at BBB or Baa2. On debt maturity profile, we have refinanced the USD 500 million U.S. bond due by March 2023 under a favorable market window in January 2022 at about 3% coupon rate, benefiting the future interest goals. We don't have any further bank loans and bonds maturing this year. Our effective interest rate went up to 3%, and our current proportion of fixed to floating rate debt is approximately 2:1 being 2/3 fixed and 1/3 floating compared to just 50:50 last year. That means more that are now on fixed interest rate to counteract the potential adverse impact from the interest rate hike. We shall continue to monitor the market environment such that we can further enhance and optimize our debt profile and structure when appropriate. The average debt maturity is now approximately 4 years. This ends my presentation. Thank you.

We'll open up the floor for questions. The first question is roaming used to be over 10% of revenue for Hong Kong mobile operators? Is it possible to get back there? Or do the cheaper roaming plans now available limited to a much smaller amount?

Thank you for the question. I think overall, we are quite optimistic judging from the rebound of roaming in at least in the first months of 2023. And as I was sharing, we saw quite a significant growth in the month, which already represents around 70% pre-COVID. Of course, over the year, we're still optimistic that it will be up to 60% to 70% of the pre-COVID period.

Next question. With the full reopening of Mainland China, how quickly do you expect the economy to recover? And what impact will that have on your Enterprise Solutions business there?

Again, I think we are optimistic about the business both the local side and the China side for the Enterprise Solutions business. Number one is that last year, we saw GDP contract by 3.5% because of all these COVID and periodic lockdown, both in Hong Kong in the first quarter and then throughout the year in Mainland. Despite that, we are able to record a 3% growth. With the government forecast of 3.5% to 5% growth, GDP growth this year, and with a lot of the simulation that the government is providing; in terms of investment, in terms of the innovation and technology area, which gives a very big boost to the digital transformation efforts for both the private sector as well as the government sector. So we do think that there will be a much higher growth as compared to last year for 2023.